Momentum Builds to Stop Job Credit Checks

How would you like your job prospects to be contingent upon whether or not a national  credit reporting agency gets it right?

A coalition of seven U.’S. Senators, led by Sen. Elizabeth Warren (D-Mass), proposed legislation this week to prohibit employers from requiring potential employees to disclose their credit history as part of the job application process.

A 2013 study from the Federal Trade Commission suggests that errors in credit reports are common and, in many cases,  difficult to correct. Still, the Society for Human Resource Management reports that  43 percent of U.S. employers conduct pre-employment credit checks, weeding out individuals with poor credit histories.

At one time, an individual’s credit history was seen  an indicator of  character but that was before the Wall Street financial collapse resulted in mass layoffs, foreclosures, medical-related bankruptcies, etc.

“Families have not fully recovered from the 2008 financial crisis, and too many Americans are still searching for jobs. This is about basic fairness — let people compete on the merits, not on whether they already have enough money to pay all their bills,” said Sen. Warren

Warren’s bill is based upon the proposed Equal Employment for All Act  (EEAA), which amends the Fair Credit Reporting Act and was originally introduced in the U.S. Congress in 2009  by  Congressman Steve Cohen (D-TN).  The EEAA now has 31 sponsors in the House.

The EEAA would prohibit a current or prospective employer from using or procuring a consumer report  for  employment purposes that contains information about the consumer’s creditworthiness, credit standing, or credit capacity.

The EEAA makes exceptions for employment: (1) requiring a national security or Federal Deposit Insurance Corporation (FDIC) clearance; (2) with a state or local government agency that otherwise requires use of a consumer report; or (3) in a supervisory, managerial, professional, or executive position at a financial institution.

Senate co-sponsors include Senators Richard Blumenthal (D-Conn.), Sherrod Brown (D-Ohio), Patrick Leahy (D-Vt.), Edward J. Markey (D-Mass.), Jeanne Shaheen (D-N.H.), and Sheldon Whitehouse (D-R.I.).

The Equal Employment for All Act has been endorsed by more than 40 organizations representing women, people with disabilities, union members, minorities and victims of domestic violence.

* Note: Before an employer can request for a credit report about an employee or job applicant, the Fair Credit Reporting Act requires the employer to tell the individual that it might use the information to make a decision. This notice is separate from other documents  — like an application. An employer may not get a report about an employee or job applicant for employment purposes without getting his or her permission or authorization first, usually in writing. If an employer might use information from a credit or other background report to  deny an individual employment, a promotion, to terminate employment or to reassign the individual  — the employer must give the individual a copy of the report and a document called A Summary of Your Rights Under the Fair Credit Reporting Act before taking any adverse action.  More information is available from the Federal Trade Commission.